(KNOWING ABOUT DEBT MANAGEMENT)
OVERVIEW OF DEBT MANAGEMENT
The scope of debt management is extensively diverse. The concept of debt has significant impact on both individuals as well as the governmental organizations all over the world. The objectives of debt management at the individual and governmental level are to reduce and possibly eliminate debts.
Debt management also has a say on the economic and financial policies formulated by a governmental organization.
✓ Explanation of Scope of Debt Management
The scope of debt management may be explained as the
premise of debt management. The term may be used to express the various areas that are covered by the debt management processes as well as the various benefits that may be received from the process of debt management.
The scope of debt management may also include the various types of debt management programs that are presently in operation. From a governmental point of view the scope of debt management extends to all the financial dues that are under the control of the governmental bodies.
✓ Objective of Debt Management
The objective of debt management is important as far as the
scope of the term is concerned. In most cases the basic objective of debt management is to reduce or even eliminate the debt of a borrower. However, if this is looked at from the point of view of governmental operations then the emphasis is on reducing the payment of debts.
✓ Debt Management and Financial and Economic Policies
It has often been observed that in case of the governmental bodies the concept of debt management is related to the economic and financial policies that come under its jurisdiction. In most cases the economic or financial policies that are formulated by the governments all over the world are to some degree influenced by the debts that these bodies have or the way they intend to
All of us are working hard to reduce individual debt burdens. In some cases, unfortunately, we are simply swapping one liability for another, data from the Federal Reserve show— cutting, say, credit card debt while adding education debt. Still, overall our burden is in decline. Consumers have cut debt by billions of money in less than a year, according to the Federal Reserve Bank of New York.
That’s undeniably positive for the personal balance sheets of millions of households. But too often families that cut debt feel they’ve done enough. It’s equally important to manage what debt remains. On an obvious level, that means continuing to pay off loans in a timely way—targeting the highest rates first and not lapsing into unnecessary credit spending.
Debt is part of our life and can be necessary, whether it is to pay for education, getting a home, buying a car, or expand our business. However, debt can easily get us into trouble if we don’t plan and take control over it.
People today have more consumer debt from debit cards, furniture stores, installment loans and other sources- than ever before. This kind of debt can be debilitating and detrimental to your financial success.
Whether it is big or small, all of us have debt to some extent and none of us like to talk about it. However, even if your debt is not too serious, it is recommended to look for advice on how to change the way you spend in order to avoid having to deal with severe financial hardships.
There are several effective ways to manage debt, so that it works to your favor. To help you control and leverage your debt, we have highlighted some of the key strategies to approach it is through DEBT MANAGEMENT!
CONCEPT OF DEBT MANAGEMENT
The concept of debt management focuses on different methods and approaches that are involved in the process of debt management.
ABOUT CONCEPT OF DEBT MANAGEMENT
There are a large number of debt management companies operating in different countries all over the world. They offer a comprehensive variety of debt management services to the customers. People who get overburdened by debt seek the help of debt management companies to get rid of their adverse financial conditions
DEBT MANAGEMENT PLAN (DMP)
A DMP or debt management plan is a procedure, which is implemented for repayment of unsecured personal loans. The debt management plans are normally operated by non-profit seeking consumer credit counseling companies.
FOUR MAIN ASPECTS OF DEBT MANAGEMENTS
Principles of debt management are extremely important for the borrowers. They come into play when the borrower has paid off a fraction of his debts and is considering to invest in savings vehicles. There are basically four main principles of debt management.
✓ USE OF PRINCIPLES OF DEBT MANAGEMENT
The principles of debt management are especially useful in
case a borrower has paid off a certain part of the loan and is presently thinking of saving some money for purposes like avoiding financial crises in the post retirement period for example.
✓ DESCRIPTION OF PRINCIPLES OF DEBT MANAGEMENT
The principles of debt management are actually facts that should be kept in mind by the debtor when the debtor decides to invest in savings vehicles after having paid off a certain
amount of the outstanding dues.
IMPORTANCE OF PRINCIPLES OF DEBT MANAGEMENT
The principles of debt management are important for the
simple reason that if the borrowers keep them in mind when they are taking their investment decisions after paying off a part of their debt they would be able to take those decisions properly and will be successful in their financial efforts.
✓ BASIC SIDES OF DEBT MANAGEMENT
The basic sides of debt management may be enumerated as
PRINCIPLES OF DEBT MANAGEMENT
Giving stress on the returns after having paid off the taxes
✓ Consumer debt does not provide any tax break
✓ Looking at the opportunity cost of the debt payments
✓ The debt that has the higher rate of interest has to be paid off initially
Debt management is the process of reducing and gradually eliminating outstanding debts. This can be done through asset management and negotiating with creditors.
✓ Debt management is also done through negotiations with creditors with the help of debt management companies. Debt management does not merely include consolidation of present debts, but also budgeting in order to safeguard against future debts. Debts should be avoided and if incurred, efforts must be made to reduce them to a point from where it is easy to pay them off.
✓ Debt Management can be done individually; nevertheless, taking the help of companies experienced in debt management
is a much more practical option.
These companies manage the creditors on behalf of the debtors.
This is the essence of debt management services, which help in managing, controlling, and reducing debts and interest rates. Debt management is principally done through the three following ways:
✓ Debt consolidation loans
✓ Debt consolidation mortgage
✓ Debt consolidation remortgage
In order to avail the services of debt management, a simple application form needs to be filled up. The information required includes the type of debt, credit score, financial status, income flow, and some other types of information.
Debt consolidation is a type of debt refinancing that allows consumers to pay off other debts. In general, debt consolidation entails rolling several unsecured debts, such as credit cards, personal loans or medical bills, into one single bill that’s paid off with a loan.
There are dozens of ways to do this, and some include transferring debt to a zero or low-interest credit card, taking out a debt consolidation loan, applying for a home equity loan or paying back your debt through a debt repayment plan.
Once you’ve chosen a debt consolidation method, it’s a good idea to keep the total cost as low as possible.
DEBT CONSOLIDATION MORTGAGES
High interest debt on credit cards, auto loans, or other consumer loans can be difficult to pay off and may create a barrier to your financial goals. However, if you’re a homeowner, you have additional options to help you manage your debt, including a debt consolidation mortgage.
✓ Refinance with a debt consolidation mortgage
As a homeowner, one way to start managing some of your higher- interest debt is to refinance your existing mortgage with a debt consolidation mortgage. For example, the ABCD Home Power Mortgage allows you to borrow additional money on your mortgage so you can consolidate your debts into one simple payment.
That way you can easily budget with a structured payment plan and an assured pay-off date.
FOOD FOR THOUGHT!
The services are also available online or over the Internet. Debt management helps the borrowers to recover from any form of debt trap. The debt management programs mainly work on principles of awareness, reduction, consolidation, negotiations, and settlement. Various companies have various debt management programs.
Once debt management is done successfully, one must not get carried away and repeat the same mistakes like using the credit cards in an unplanned manner. The monthly payment that needs to be made for debt management is based on the credit percentage per month that the creditor can get from the debtor.
COMMERCIAL DEBT MANAGEMENT
It is very important with regards to the successful running of a business. This is so because the increase in commercial debts becomes one of the biggest deterrents for all types of enterprises, be it big or small. Thus it is important for all enterprises to avail commercial debt management services.
✓ COMMERCIAL DEBT MANAGEMENT PROFESSIONALS
There are a lot of commercial debt management professionals
who are providing excellent services at the moment. The debt management professionals are hired by debt management companies to help the clients. It is always easier to start a business than to maintain it, as various problems start showing up after a few months.
✓ COMMERCIAL DEBTS
The debts that arise once a company starts running are diverse
in nature. Some of them may be enumerated as below:
➢ Business Credit Card Debts ➢ Salaries of Hired Stuff
➢ Considering the increasing variety and number of debts encroaching the businesses most of the businessmen consider it appropriate to avail the help of the commercial debt management companies.
DEBT MANAGEMENT SERVICES
Debt management services are provided to all those consumers who are carrying the burden of huge debts on their shoulders. These professional services have been designed to help the consumers in paying back their debts through easier terms and conditions arranged by the debt management companies
BENEFITS OF DEBT MANAGEMENT SERVICES
The firms operating in the field of debt management services share a good relation with a number of creditors and especially with different credit card companies. These professional relationships are very beneficial for the borrowers because these companies can arrange better debt repayment plans from these creditors that are otherwise very hard to get
INTERNATIONAL DEBT RECOVERY
International debt recovery is the process, which involves the process of recovering debts from different countries or at the international level. The international debt recovery process is being performed by different entities, which include attorneys and debt collection agencies.
The services offered by the international debt recovery agencies are availed by a large number of corporate houses and multinationals ranging from small to large sizes.
The products and services of the international debt recovery organizations include the following:
✓ Debt recovery
✓ Credit control
✓ Billing management
✓ Skip tracing and asset management ✓ Business finance services